View from City Road: Dixons accounts lead the pack

DIXONS is well known for rushing camcorders and the like to the high streets as soon as they are invented. Now it is extending its market leadership to corporate governance, bringing shareholders the latest in new-fangled gadgets before they hit the statute books.

Above the auditor's report in its latest accounts is a 'Directors' Responsibilities Statement', setting out the board's duties for the preparation of the annual accounts. It tells us that they are required by law to prepare accounts that give a true and fair view; that 'reasonable and prudent judgements and estimates have been made'; and that they are responsible for maintaining adequate accounting records to safeguard the assets and to prevent and detect fraud.

Dixons should be congratulated for its action. It also underlines its commitment to corporate governance - it has funded a chair of ethics at the London Business School - by devoting a page to a description of its own system. If proposals from both the Cadbury Committee and the Auditing Practices Board are implemented, such statements will be a regular feature of company reports.

To the average shareholder, it will say nothing new. Indeed, they may be concerned that it says nothing about the directors' responsibility for running the business to produce ever-increasing profits and dividends. The problem is that measuring their skill in doing that is far harder than checking that they comply with accounting rules. And too often, the inadequacies are not apparent until it is far too late.

That is one of the key problems; no amount of disclosure can compensate for inadequate management. That shifts the responsibility back to shareholders, who vote for directors and have a vested interest in ensuring that the non-executive directors are strong and independent enough to be a proper check on the performance of executives.